Learning Outcome. The learning will:
● Be able to understand Business Law. From examples of a medium-sized business, I will explain in detail how to apply Business Law in a classic example of business.
The assessment criteria. The learner can:
● Analyze Business Law in UK and EU and how it affects sellers and customers.
● Analyze the duties and rights of both sides of a business, the buyer and the seller/owner of a business. Understand it from examples that can be applied in real life
● Understanding and analyzing business law from a classic and common perspective. A used car company analyzes the mistakes made by the company and the customer.
Task 1 – Business to consumer relationship.
● Facts that happened in the following case:
Jason was involved in selling second-hand cars.
Although Jason told him that the rest was in working order, Gary’s test drive after making the purchase revealed that the seat was heating up.
In some cases, even when the terms are not stated expressly, a contract is recognized if the behavior of the parties plainly shows a willingness to enter into an agreement. Despite there being no written offer or acceptance, this is referred to as an implied contract. In other words, a contractual connection results from the actions of the parties.
Contractual terms may alter the language you’re reading. They are able to balance out unfair corporate contracts. They can deal with conduct that impedes the contract’s performance.
All contracts, whether they be between a business and a consumer, between businesses, or between two persons, must follow the same legal guidelines when implying terms. There is no distinction.
In a legal sense, there are two different categories of contractual terms: express terms and implied terms.
Only when specific legal requirements are satisfied can the law impose implied terms and conditions.
An implied condition in a contract for the sale of goods as defined under the Sale of Goods Act of 1979 (SOGA) (contract for the sale of the car.). If a product satisfies the criteria that a reasonable person would consider satisfactory, taking into account:
● Any product description;
● The value;
● Other circumstances in general (section 14(2A), SOGA).
In order to assess if things are of adequate quality, it is also necessary to consider their state and condition as well as the following factors (among others):
● Suitability for all intended uses for which products of that type are typically provided;
● Aesthetics and finish;
● Absence of small flaws;
● Durability (section 14(2B), SOGA).
Regarding Title: Condition
The implicit condition of title is that the buyer “has a right to sell the goods in the case of a sale and that the buyer will have a right to sell the goods in the case of an agreement to sell, at the time the property is to pass,” as stated in Section 14(a) of the Sale of Goods Act of 1930.
This shows that the seller is only permitted to sell a good if he is the rightful owner, is in possession of the title to the goods, or represents the title holder. An implied prerequisite for the sale of a good is its title or ownership of the good. If the seller sells the stated item to the buyer without actually holding the title, a condition is breached. In this situation, the buyer has two choices: either return the goods to the seller and ask for a refund or refuse to accept the goods at any point after learning of the vendor’s fictitious title or before delivery.
Breach of an Implied Term
Contracts with inferred terms have “equal status” with those with clear terms.
They will either:
● Terms of the agreement
● Unnamed terms.
As a result, they will be handled exactly like every other clause in the contract since that is what they are.
Implied terms come in two different varieties.
1. Category of the Contract: Under the applicable legal standard, the term must be implied.
2. Case Details: Based on the facts of the case, the inferred term is necessary. These unstated conditions are unique. Although some are frequently indicated in company contracts for “business efficacy” reasons.
3. Contracts for the Sale of Goods (applicable in the sale of the car).
The following clauses are included in contracts for the sale of goods:
The seller has the right to sell the goods. This is also a condition of the contract
a. The items are not subject to any unauthorized security interests,
b. The items delivered under the contract will be suitably suitable for any use that the buyer disclosed to the supplier.
c. Unseen sales of items will be of merchantable quality, adhere to a sample, and match their description.
When a term is implied, it is taken to have been part of the agreement from the start. The contract was created at that point.
A term will only be implied if it is necessary to give the contract “business effectiveness.” In essence, without it, the contract cannot be implemented.
The Sale of Goods Act includes provisions for implied conditions and guarantees to safeguard purchasers from seller fraud. However, since a seller cannot be held accountable for a customer’s poor decision, it is the seller’s responsibility to first check for obvious flaws and inquire about the product’s quality before entering into a contract of sale of goods.
It is advised that the buyer expresses the goal and provides a reasonable description of the items thus wanted in order to ensure that the seller purchases an appropriate good.
Evaluate statutory transfers of legal and possessory titles
Sellers are said to have ‘possessory’ titles rather than ‘absolute’ titles when their rights are based on hostile possession (often referred to as squatting) or when their rights cannot be established because the title deeds have been destroyed or lost.
Possessory titles are frequently issued when the owner asserts that they have obtained the items through hostile possession. Alternately, it could occur when the estate’s owner is unable to provide documentary proof of ownership for some reason. These books are uncommon.
Under these conditions, the statutory transfer of legal and possessory titles is applicable:
A) After the initial six months have passed, the transferee has rights under Section 8 (2) of the Act, 2004. Following seven months from the transfer of the vehicle’s titles, Gary will have exclusive possession of the vehicle and all required repairs. Because the Act of 2004 places responsibility on the transfer for a period of six months, which is given to make the transferee understand the full extent of any flaws associated with the property so they can decide, Gary would have the possessory title in the aforementioned circumstances, which occurred after seven months of the transfer and return it to the transferor. However, in the example at hand, since Gary discovered a problem with the car’s back axle seven months after the transfer, Gary is likely to have treated the car incorrectly or not have been concerned enough to notice all the property after six months had passed. The transferee would be solely responsible for any actions taken while exercising possessory title.
B) The statutory Possessory Titles of the car would be on Jason in the scenario where Gary asked Jason to fix the clutch since Section 8 (2), according to the Possessory Titles Act of 2004, the possession title must be held for six weeks before being transferred. Given that the Possessory Titles Act of 2004’s Section 8 (2) stipulates that a transfer of title and possession remains with the transferee, Gary would be the only one having the actual Possessory Titles in the first scenario, which takes place two weeks after the transfer of the vehicle. In the same way, Gary would be in charge of fixing any problems with the car that were discovered within six months of the transfer. As a result, Jason would be responsible for any circumstances that resulted from the car’s fault due to his possessory title, which was not absolute nor legitimate.
C) As stated in Section 8(2), after six months have passed following the transfer, the Possessory Title of the property becomes absolutely transferred, and the transferee is responsible for any mishaps resulting from improper handling of the property, Gary is the owner of the Possessory Title for the accident Gary experienced while returning the car to Jason.
The Possessory Title for the accident Gary caused while returning the car to Jason would be Gary’s responsibility because the exemption period as outlined in Section 8 (20) of the Possessory Titles Act of 2004 expires within six months of the transfer. Gary would be fully accountable for the accident due to fault in the car because he was returning the car to Jason after seven months of the transfer.
D) Since Jason’s title was invalid, he would hold possession of the vehicle in the scenario where Gary was informed by the police that the car was stolen property. This is because Section 29 of the Act of 2004 states that a person does not have possession of a piece of property if possession is not granted in accordance with the Act or by a court order.
What recourse Gary has:
Gary has the right to request a refund of the car after alerting the police because it was a stolen vehicle. When Gary turns the item in, the police will assign him a crime reference number and a property log number. Along with the receipt or any other form of proof of purchase, he can provide these to the seller as evidence that he has returned the goods (ex: bank statement).
Does Jason have to fix the clutch?
The Consumer Rights Act, which offers a statutory warranty for used cars purchased from a dealer, has been protecting those who purchase used cars since 2015.
There is no one correct response to the question of what constitutes a statutory warranty on a used car. The length of time a buyer has owned their car and the method of purchase will determine the level of protection they will have under the Consumer Rights Act of 2015.
-If an automobile has a problem within the first 30 days of purchase, it is still covered by the manufacturer’s warranty, and the buyer can simply reject the car and return it to the dealer for a refund.
Unless the seller can show otherwise, the vehicle is still covered by the statutory warranty if a problem shows up between 30 and six months after the date of purchase. In this case, the law presumes that the issue was present at the time of purchase. Here, the vendor only gets one chance to make things right. If they are unable to achieve that, the buyer is entitled to a refund; however, the amount of the return may be less than the initial purchase price in order to take into account the period the car has been operational.
After six months, the automatic protection of the Consumer Rights Act 2015 expires. It is up to the buyer to prove that there was a fault with the car at the time of purchase if they want to pursue a dealer for a claim to repair a fault.
Thus, we can come to the conclusion that Jason should fix the clutch, as it is a buyer’s right.
Principles of product liability to given scenarios
One or more of the following are the most typical causes of action for bringing a claim relating to product liability:
● The Consumer Protection Act claim (usually preferred by claimants as liability is strict).
● Common law negligence action.
● Breach of contract.
The Consumer Protection Act holds a producer strictly liable for losses brought on by a defective product, in accordance with the EU Product Liability Directive. Accordingly, the claimant is exempt from having to show that the producer was at fault. Instead, to prevail in a claim, the claimant only needs to demonstrate that:
● The product had a flaw;
● The claimant experienced harm.;
● There was a connection between the flaw and the harm that was done.
A claimant might also be entitled to sue the seller for breach of contract. Either an express contractual provision relating to the defective product has been violated, or an inferred contractual term has been violated, in this case. According to the Consumer Rights Act, when a company offers a product to a customer, the contract for sale is taken to contain the following clauses:
● Goods must be of satisfactory quality.
● If the intended use of the goods is disclosed to the contracting party, the goods must be fit for that use (expressly or by implication).
● Goods must be as described.
Task 2 – Consumer Credit.
A credit agreement is a legally enforceable deal that necessitates the approval of both the lender and the borrower.
Consumer credit agreements can be regulated or unregulated, and there are a number of factors that Jason must consider when considering whether a consumer credit agreement is subject to the Consumer Credit Act 1974 (CCA 1974) or not.
The pre-contractual and post-contractual requirements required by the FCA Consumer Credit Sourcebook contain the practical application of this idea (CONC). The agreement might not be enforceable without a court order if Jason (the lender) does not comply with the pre and post-contractual disclosure requirements, and they might have violated their regulatory obligations.
The FCA Consumer Credit Sourcebook’s pre and post-contractual criteria represent the practical implementation of this concept (CONC). If Jason does not adhere to the pre and post-contractual disclosure standards, they may have broken their regulatory duties and the agreement may not be enforceable without a court order.
Specific forms of consumer credit agreements
Specific regulatory restrictions apply to particular forms of consumer credit agreements. The principal forms of contracts are:
● Consumer hire agreements
Consumer credit agreements, including consumer hire agreements, are governed by the Financial Services and Markets Act of 2000 (FSMA 2000). A person (as defined by the FCA Glossary) cannot engage in a regulated activity in the UK unless they are an authorized person or exempt, according to Section 19(1) of FSMA 2000. Unless an exemption exists, entering into or agreeing to enter into a regulated consumer hire arrangement as the owner is a designated kind of action under Article 60N(1) of the RAO.
● Debt sale and purchase agreements
For a while now, the UK has seen a lot of activity in the debt sale and buy market, which is a crucial means for lenders and debt sellers to decrease the balance sheet burden. In order to get value for underperforming accounts, debt sale is frequently used. This is particularly true for regulated mortgages, loan and card arrangements covered by the CCA 1974, specialized debt including debt from store cards, as well as distressed and bankrupt debt. The specifics of the sale documentation will vary depending on the type of debt. Debt Sale and Purchase Agreements describe the operative clauses of a debt sale and purchase agreement as well as its nature and structure.
Distinguish between actual, apparent and implied agency:
● Implied authority
When someone’s actions imply the right to act on another person’s behalf, this is known as implied authority.
Consider the following scenario > During a discussion, a car salesman offers a customer a free rustproofing service. The buyer will probably assume that the salesperson is authorized to present this offer. But what if they don’t? The management will have to decide whether to accept the offer or reject it in this circumstance.
● Apparent authority
The ability to act on behalf of another person, presuming other circumstances are true, is known as apparent authority. It’s frequently used in agency law when a principal, like a business, informs a third party that an agent has its permission to act. Although there may be restrictions, the agent may act on behalf of the principal. The principal must approve all choices before they are formalized, even if the agent may be able to act on their behalf. The agent looks to have full power and authority over a third party, though.
For instance, you might go to a vehicle dealership and work with an associate who crafts an agreement and even offers a $2000 discount, but the following day you discover the deal is invalid since the associate was merely a mechanic employed by the dealer and lacked the power to draft and seal a deal. Due to a staffing shortfall, he or she was merely filling in on the sales floor, but you (the third party) thought the mechanic (the agent) had the right to seem to be selling you a car on behalf of the dealership (the principal).
● Actual Authority
Actual authority is, as the words suggest, the power that the principle gives the agent, either explicitly or tacitly. When a principle behaves in a way that gives the impression to a third party that an agent has specific capabilities that he may or may not actually possess, this is known as “appearing authority.”
Actual authority is distinct from implied power, but both fall under the umbrella of the agency principle.
When the agent is given permission to act on behalf of the principal, the challenge of distinguishing between apparent authority and implicit authority typically arises. In reality, it can be difficult to tell whether a particular action taken by an agent is inextricably linked to the specific powers granted to that agent, in which case the agent may be thought to have acted under implied authority conditions, or whether it is necessary to prove that the agent has overstepped his authority and decide how the rules of apparent authority should be applied.
Both how the third party regarded the agent’s authority and how it can be evaluated in the context of the relationship between the principal and the agent should be taken into account when determining the extent of the agent’s rights. Unless the principal clearly indicates that the agent is not granted certain rights, the implied authority must be demonstrated if the agent adopts a position in which a person is typically thought to have certain rights (DeMott, 2006).
In all circumstances, the principal has the right to limit the implied powers assigned to the agent, but such a reduction must be disclosed to other parties. In the absence of such authorization, even though the agent will still act, the third party will have sufficient grounds to think that the relevant rights have been granted to them when the agent appears to have apparent power.
Car loan consumers choose conditional sale arrangements like hire purchases because they may spread out the cost of a vehicle into manageable monthly installments.
A conditional sale agreement (also known as a hire buy) for car financing consists of equal, set monthly payments made over a predetermined period of time.
The interest rate and the borrowed amount will be used to calculate the monthly installments. Another point that Jason should evaluate is that, generally, people with outstanding credit ratings will pay less interest than people with bad ratings.
The borrower could also need to submit a down payment to secure the deal, depending on Jason’s decision.
Once the last payment is made and the contract expires, the car will be owned by the person who borrowed the money.
The starting point for pre-contract requirements is the Consumer Credit Directive 2008/48/EC (CCD). The CCD contains provisions that require creditors to disclose information to consumers before they enter into certain types of agreements with consumers (Articles 5.1 to 5.5 and 6.4, of the CCD). These are encapsulated in Section 4 of the FCA’s Consumer Credit sourcebook (CONC 4). The FCA has emphasized that one of the main principles underpinning the consumer credit rules is to ensure that consumers are treated fairly.
It must be simple to comprehend and must include important financial data, such as:
● Total credit amount
● The credit period
● The full amount owed
● Examples of the amount due in the event that the debt is paid off early
● The interest rate
● The annual percentage rate (APR)
● Any additional fees or charges, such as those for late payments
The same rules that apply to pre-contractual information apply to the terms that must be included in the credit agreement instrument that the borrower signs. Additionally, this paper ought to be easy to read, straightforward, and brief.
You shall deliver a copy of the Credit Agreement and any other papers to which it refers to the Borrower after it has been executed unless such document is substantially the same as the one you have already furnished.
It is requirements are a catch-all phrase for the guidelines on the details that must be disclosed by lenders to borrowers over the course of a regulated credit agreement. A statement of account and a copy of the credit agreement are two examples of the types of information that must be delivered on-demand and at regular periods, respectively. The CONC 6 regulations and guidance on post-contract requirements must be followed by businesses engaging in consumer credit-related activities. These restrictions continue to require creditworthiness evaluations.
A) There are two types of real authority. Contains both explicit and implication authority.
Having express authority occurs when the principle explicitly delegates the agent’s authority, whether orally or in writing.
The ability an agent has to take acts that are logically related to and necessary for the effective fulfillment of his responsibilities is known as implied authority.
Evident exists when the principal’s words or deeds would lead a logical person in the third party’s position to believe that the agent was authorized to act, even though the principal and the claimed agent had never discussed such a connection.
B) In addition to the pre-contract requirements, businesses engaged in consumer credit-related activities must abide by CONC 5, which contains regulations and advice on responsible lending requirements, such as the need to conduct a creditworthiness assessment prior to signing an agreement, business practices related to credit brokering and P2P agreements, and business practices related to affordability and creditworthiness. Setting reasonable credit limits that are adequate for the borrower is part of responsible lending.
The creditor must follow the guidelines in CONC 5.3 and determine the borrower’s creditworthiness before giving or considering increasing the amount of credit that is accessible to the borrower.
● A copy of the signed contract must be sent to the consumer, together with information on their right to a refund. Additionally, they are always free to request more copies.
● All customers must be given regular statements. They can also ask for more statements, up to one each month.
● You must give notices of arrears if the customer skips payments or gets behind by a particular amount. Additionally, you must give notice if you plan to charge interest or impose a default sum, such as in the event that a party doesn’t pay their agreed-upon installment.
● The borrower typically has the ability to renounce a credit arrangement within 14 days of signing it, without providing a justification. Within a day of receiving a copy of the executed agreement—or notice of the credit card credit limit—if this happens after the 14-day deadline. The borrower is still liable for repaying the credit plus interest for each day it was used even if they take advantage of the cooling-off period. The purpose of customers’ “cooling-off” rights is not to enable unauthorized returns of products or services.
Rights and duties of an agent:
The agent should confirm that the car is in excellent operational condition prior to selling it. If the vehicle has any minor flaws, it should be corrected because doing so would increase its worth. If the buyer feels that the agent deceived them by not fully disclosing any problems, they may sue the agency for misrepresentation.
If the vehicle has a serious flaw is therefore not roadworthy, for example, if the mirrors are damaged or the tires are worn out.
Selling a car that isn’t roadworthy is against the law unless the buyer is completely aware of this fact, thus the agent needs to be very forward about this from the moment they market the automobile.
The agent should additionally compile any supporting documents, such as:
● The service history,
● The MOT certificate
● The V5C certificate.
Consider renewing the MOT if it is due to expire or has already done so. If the car doesn’t have a current or valid MOT at the time of the sale, the buyer won’t be able to drive it away.
The agent will need to replace these documents if they are lost. Any MOT testing station can provide a replacement MOT certificate. In addition to the V5C document reference number or the MOT test number, the agent will also want the vehicle’s registration number.
If the vehicle is not roadworthy, the agent must specify this in the initial advertisement. A non-roadworthy car cannot be sold unless someone wants to buy it for parts or repairs.
The agent must confirm the prospective buyer’s legal right to drive the car before allowing them to do so:
● Confirming that they possess a current license,
● They have the necessary insurance to operate your vehicle; they can have Driving Other Cars (DOC) coverage, which enables them to operate another person’s vehicle with that person’s consent.
● A potential buyer should always have the agent along for the test drive.
The agent can find themselves in court if they mislead a buyer or missell an automobile.
The paperwork required to sell a car:
● V5C registration certificate
● Service History
● receipts for vehicle maintenance and repair
● MOT certificate
● The purchase agreement and any related financial documentation
Note: If a buyer discovers a flaw after 30 days but before the end of six months, they may ask for a repair or replacement. The buyer usually can’t request their preferred option, even though they are entitled to it if the fault existed at the time of delivery, unless the agent is able to show that it didn’t. Instead, you, as the agent, get to decide which option is the best and most affordable for them to repair the car.
It is the agent’s responsibility to fix the car if the buyer discovers a flaw, but it is also the agent’s right to determine the best course of action for repair.
Task 3 – Termination and default in consumer credit.
This is the amount the customer owes the seller for the car since he wants to terminate the contract they had.
Given that he owed money for the sixth and fifth installments, the customer is simply required to pay the amount that is specified.
“He has paid twelve installments and the thirteenth is owing but the car has been badly damaged in an accident.”
Since he surpassed the required, half of the payment amount, and the car was involved in an accident, he will not be forced to pay anything or any amount of money in order to end the contract.
Among the borrower’s rights are:
● Prepayment of any government loan is free of charge.
● Use forbearance or deferral to postpone payments.
● Obtain a copy of the rights, liabilities, and obligations of the loan.
● The right to know when the loan is repaid in full
● By executing the promissory note, you promise to pay back the loan.
● Regardless of receiving billing notices, make payments.
The following are possible responsibilities for the borrower:
● You formally commit to paying back the loan by signing the promissory note.
Usually, this denotes your agreement to repay the debt you will get.
● Regardless of receiving billing notices, make payments.
This would imply that even without being informed, you should be able to pay back your debt.
● While awaiting authorization for a deferment or forbearance, keep making payments.
This would imply that even without being informed, you should be able to pay back your debt.
● While awaiting authorization for a deferment or forbearance, keep making payments. And notify your lender if:
2. Drop out of school.
3. Change to a different school.
4. If your name, address, or Social Security number may be changed.
● Keep in touch with your lender or loan servicer, don’t forget.
Throughout the term of your loan, you must stay in touch with your lender because it is helpful when you have a query or require immediate assistance.
Task 4 – Monopolies and mergers document.
A monopoly is a condition in the market when one company dominates a certain industry or sector. It is able to do this to remove all other prospective competitors.
When one company dominates the market for a specific commodity or service in a given sector, it is said to have a pure monopoly. It’s important to remember that in the UK, a company is considered to have monopoly power if it holds more than 25% of the market.
The majority of recognizable monopolies in the UK are associated with the technology sector and are known as “big tech” monopolies.
● Example of Monopoly in the UK: Microsoft.
Microsoft is a manufacturer of computers and software. It dominates the tech business with a market share of more than 75%, making it a virtual monopoly.
Unlike the US, Germany, and the European Economic Community, the UK does not have an official “anti-monopoly policy.” Still, it does have a set of laws that specify what conduct is permitted. Additionally, the UK has a structure that looks at specific market failures and offers temporary fixes.
The Competition Act of 1998 and the Enterprise Act of 2002 are the two primary laws in the UK that address monopolies and monopolistic behavior.
Anti-competitive action is prohibited by Chapters I and II of the Competition Act of 1998. These rules forbid firms from entering into anti-competitive agreements and from abusing their market-dominant positions.
● Companies are encouraged by competition to provide customers with the best deals on goods and services.
● It promotes innovation and efficiency while lowering costs.
● Companies must behave independently of one another while still being susceptible to the pressure from their rivals in order for competition to be effective.
The Treaty on the Functioning of the European Union’s Articles 101 and 102 serve as the foundation for EU antitrust regulation (TFEU).
● Between two or more independent market operators, Article 101 forbids anti-competitive arrangements.
● Companies with a dominant position in a market are not allowed to act abusively, according to Article 102.
The UK’s version of Article 101 of the Treaty on the Functioning of the European Union, the Competition Act of 1998 (Competition Act) regulates restrictive agreements and practices (TFEU). In particular, Chapter I outlaws agreements, decisions made by associations, and coordinated actions that limit competition within the UK.
● Fix the cost.
● Limit or manage investment, markets, production, and technology.
● Markets for shares or sources of supplies.
● Unfairly discriminate.
● Make contracts conditional on unconnected additional obligations.
Chapter I of the Competition Act, like Article 101 of the TFEU, applies equally to formal and informal agreements, whether legally binding or not, and whether written, oral or tacit.
In the event that all of the following conditions are satisfied (section 9, Competition Act), an agreement that is not excluded may profit from an exception.
● It advances distribution or manufacturing as well as technical or economic progress.
● Consumers are fairly allocated among the benefits that result.
● The goal being sought requires the restricting components.
● The parties are not given the chance to significantly reduce competition.
Chapter I automatically excludes certain agreements, such as those subject to UK merger control, covered by the Broadcasting Act of 1990 or the Communications Act of 2003, and subject to competition review. Land agreements (contracts and other business agreements in the real estate industry), which were formerly exempt from Chapter I, are now governed by Chapter I as of April 2011.
After Brexit, commercial ties between the UK and the EU will be governed by the Commercial and Cooperation Agreement (TCA), which has rules for regulating antitrust enforcement and cooperation between the EU and UK as of January 1, 2021.
● According to the TCA, the EU and the UK must both regulate potential trade-distorting subsidies.
● The UK is no longer subject to the decisions of the EU.
Competition and Market Authority = CMA
Function and effectiveness Market Authority.
CMA endeavors to guarantee that corporations adhere to the law and that consumers receive fair deals when purchasing goods and services.
They do so in a variety of ways, including:
Investigating corporate acquisitions to ensure that they don’t reduce competition
● If we suspect there are issues with consumers or competition, we look at entire marketplaces.
● by taking legal action against organizations and people that engage in cartels or other anti-competitive behavior
● defending customers against unethical business practices
● urging the government and other authorities to use the market’s competitiveness wisely for the benefit of consumers
Unministerial and independent, the Competition and Markets Authority (CMA) is a division. A CMA panel’s independent members decide on certain inquiries.
Report a company Price-fixing, bid-rigging, market-sharing, and information-sharing among enterprises are all examples of cartel activity.
You can email CMA to express your concerns or provide proof that a market isn’t functioning properly.
In general, the CMA will try to focus consumer enforcement actions where it can achieve broad reforms throughout the entire market and address serious consumer harm, especially with regard to new concerns. The CMA will situate its interventions within a broader market analysis with cases informed by distinct conceptions of harm that, when necessary, take into consideration dynamic economic analysis. This ensures that interventions are commensurate to necessity, and do not place undue costs on business, but rather help build an environment conducive to the growth of competitive firms.
The CMA will foster free and competitive markets and advance consumer welfare by using its enforcement mechanisms for consumers. It will work to alter the market in order to give customers more options, more assurance, and better value for their money.
Function and effectiveness of the Financial Conduct Authority and the Competition
The UK’s financial services sector is governed by the Financial Conduct Authority (FCA). Its responsibilities include safeguarding clients, maintaining the industry’s stability, and encouraging healthy competition among financial service providers.
1. FCA compliance is a kind of fundamental reality check for businesses offering different types of financial services, through multiple channels.
2. The FCA will enforce standards and levy fines as part of its regulatory responsibilities. Orders to halt trade and, if necessary, criminal charges are just two examples of these sanctions. Consumer compensation will also be secured through FSCS and FOS.
3. The FCA is wholly supported by the businesses it oversees.
4. FCA compliance is a crucial element in building confidence. Customers choosing a service have far less to worry about.
Before providing regulated services to their clients, financial services brokers must be FCA authorized.
The FCA monitors businesses and people to make sure they adhere to the rules. This is based on three main strategies and is risk-based:
● proactive supervision
● reactive supervision
● thematic analysis
To safeguard consumers and take action against businesses and people who fail to live up to our standards, the FCA uses a broad variety of enforcement tools, including criminal, civil, and regulatory actions.
This could include:
● revocation of a company’s authorization
● preventing people from engaging in regulated activity
● preventing organizations and people from engaging in certain regulated activities
● punishing businesses and people who violate our rules or engage in market abuse with fines
● levying penalties against businesses that violate competition laws
● releasing a statement when we start taking punitive action
● publication of warning, judgment, and final notification information
● requesting injunctions, restitution orders, winding-up and other insolvency remedies from the courts
● pursuing criminal charges to combat financial criminality, such as insider trading, unlicensed business, and false FCA authorization claims
● sending out notifications and cautions about unauthorized companies and people, and requesting that web servers turn off any associated websites
Agrement CMA and FCA Competition prohibitions is a agreement that describes the working arrangements between the CMA and the FCA with regard to their concurrent authority to apply the prohibitions on agreements that prevent, restrict, or distort competition and on the abuse of a dominant position under Chapter I and Chapter II of the Competition Act 1998 and under Articles 101 and 102 of the Treaty on the Functioning of the European Union; the “market provisions” in this MoU relate to their concurrent authority to carry out Enterprise Act 2002 market studies and to refer matters to the CMA for the formation of a CMA group to carry out an extensive market inquiry into one or more UK markets for goods or services; providing assistance with the Financial Services and Markets Act of 2000s (FSMA) competition investigation;
● According to Article 82 of the EC Treaty, it is legally forbidden to exploit such a dominant position.
Article 102 TFEU prohibits businesses from abusing their position if it may affect trade between the Member States and they hold a dominating position within the EU or a significant portion of it.
Determining whether a company is dominant under EU competition law can be challenging. Even if having a majority of the market is not necessary for dominance, a company with a 50% market share is frequently seen as such.
The Commission’s definition of “dominant position,” which incorporates both market shares and the notion of “market power,” supports long-standing Community case law. The ability of a business to act independently of rivals, clients, and ultimately the broader public in order to maintain effective competitiveness in a relevant market is referred to as market power.
The European Commission first lays out the guidelines it would employ moving forward to determine whether a firm is in a dominating market position and whether that dominant market position is being abused. Additionally, it gives dominant businesses the chance to defend their behavior and methods.
The position of the dominant company, market conditions, particularly barriers to entry and growth, the position of clients or input suppliers, the position of the dominant company’s rivals, the extent of the allegedly abusive behavior, and any indication that a foreclosure has actually occurred, and the pricing strategy of the dominant company is frequently relevant in the eyes of the for deciding whether an abusive dominant position has occurred.
Case example of a dominant position that has been considered abuse by the European Commission: Intel.
● The Commission concluded that Intel had engaged in two different types of conduct to take advantage of its dominating position in x86 Central Processing Units (CPUs). First, Intel offered discounts to computer makers (also known as OEMs) as long as they purchased all or nearly all of their x86 CPUs from Intel, at least for a given market. In a similar manner, Intel compensated a sizable retailer directly in exchange for the shop stocking only computers powered by Intel x86 CPUs. Second, Intel paid OEMs directly in order to limit the sales channels accessible for certain products using a competitor’s x86 CPUs and to stop or delay their release.
● The case began with a complaint from Advanced Micro Devices on October 18, 2000. (AMD). New allegations were added to this lawsuit in November 2003. The Commission began looking into certain aspects of the additional complaint in May 2004. Accusing Intel of engaging in exclusive marketing deals and other actions with Media Saturn Holding (MSH), a European distributor of electronic equipment, AMD filed a complaint with the German National Competition Authority on July 17, 2006. This complaint was sent to the Commission in coordination with the German National Competition Authority.
● The Decision required Intel to stop any detected abuses that were still occurring as well as to refrain from any actions that would have the same or a similar goal or effect. Regarding the penalty, the Commission fined Intel EUR1.060 billion. (13) Based on the Commission’s penalty guidelines, the sum was determined. The Commission solely considered CPU sales billed by Intel to businesses in the EEA in order to determine the value of sales in the EEA directly or indirectly attributable to the infringement. This was therefore in Intel’s favor. Finally, no aggravating or mitigating factor was taken into consideration in the calculation
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